Investors furious at Storm inquiry

SUNSHINE Coast investors burnt by the $3 billion collapse of Storm Financial are furious that a landmark inquiry into the company’s demise failed to take the banking industry to task.

While investors agreed with the overall thrust of the joint parliamentary committee report, released late Monday night, they said a perfect opportunity was missed to have legislation enshrined that would provide bank customers with more protection.

Coast-based Storm Investors Consumer Action Group co-chairman Mark Weir said lender liability should have been at the heart of the parliamentary joint committee for corporations and financial services report.

“They’ve aimed the big guns at the financial services industry and the regulators, but they’ve aimed a pop gun at the banks,” Mr Weir said.

“They may as well have slapped the banks across the face with a wet tissue.”

Mr Weir said it was hard to believe the banks did not get a mention in the committee’s 11 recommendations after the mountain of evidence it had heard relating to malpractice, sloppy book-keeping procedures and predatory lending on the part of banks.

He said those poor banking practices culminated in the Commonwealth Bank’s mismanagement of the critical margin-loan issue and the “heartless and unconscionable decision” to sell down Storm clients’ index funds without warning.

“We note that the committee was very critical of Storm and its investment advisory strategy – and that’s fair enough – but the banks have successfully and artfully slipped through the cracks in the committee’s final recommendations,” Mr Weir said.

The report, which was tabled following a nine-month investigation, called for changes to the Corporations Act to require financial advisers to place their clients’ interests ahead of their own.

It also wants the Australian Securities and Investments Commission to be able to deny, suspend or cancel financial services licences.

But it stopped short of calling for legislation that would outlaw commissions in financial planning, with the issue thrown back at the government.

Another Coast-based former Storm investor, Sean McArdle, said he was ambivalent about the inquiry, because there was never an attempt to determine guilt or wrongdoing on the part of the banks.

Mr McArdle, a forensic police officer, said he lost about $4.5 million as a result of Storm’s collapse last year, including his house. He is now renting.

“One thing I’m really disappointed about is that, despite a tsunami of evidence that was handed across to them by submission, the parliamentary committee has failed to back calls for a royal commission into the actions of Australia’s largest bank, the Commonwealth Bank,” Mr McArdle said.